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SOME  FACTS 
REGARDING 

GOVERNMENT  OWNERSHIP 

OF 

TELEPHONES 


Issued  by  the  New  York  Telephone  Company  for 
the  information  of  its  employees,  and  to  give 
to  the  public  helpful  facts  regarding  the  workings 
of  government-owned  systems  abroad,  and  the 
privately-owned  systems  in  the  United  States. 


FEBRUARY  27th,  1914 


JL  <*•  "r  '\r 


Some  Facts 


Regarding 

Government  Ownership 


Telephones. 


Issued  by  the  New  York  Telephone  Company  for 
the  information  of  its  employees,  and  to  give  to  the 
public  helpful  facts  regarding  the  workings  of  govern¬ 
ment-owned  systems  abroad,  and  the  privately-owned 
systems  in  the  United  States. 


February  27th.  1914. 


EXPERIENCES  UNDER  GOVERNMENT  OWNERSHIP. 

1 —  The  Awakening . 

2 —  Failures  of  Government  Ownership  Not  Confined  to 
Europe . 

3 —  No  Novelty  of  Government  Ownership  of  Railroads  in 
United  States. 

4 —  The  Experience  of  Our  Neighbor. 

5 —  World  Wide  Inefficiency  of  Government  Management. 

6 —  Character  of  Some  Government  Ownership  Arguments. 

7 —  The  Opinion  of  an  Expert. 

8 —  The  Managers  of  Government  Owned  Systems  have  no 
Illusions. 


RATES 

9 — Misleading  Information  on  Telephone  Rates. 

10 —  Comparative  Costs  of  Service. 

11 —  Comparative  Costs  of  Service. 

12 —  Service  Determines  Rate. 

13 —  Facts  About  New  Zealand. 

SERVICE 

14 —  Speed  in  American  Service. 

15 —  European  Long  Distance  Service. 

16 —  Rapid ,  Reliable ,  Continuous  Service  is  Found  Only  in 
America. 

17 —  Part  Time ,  or  Continuous  Service? 

18 —  Service  Delays. 

1 9 —  Complaints. 

20 —  The  Mainstay  of  Business. 

21 —  The  Opinion  of  an  American  Abroad. 

DEVELOPMENT  AND  EXTENSION  OF  THE  SERVICE 

22 —  Government  and  Private  Operation  in  the  Same  Field. 

23 —  Europe  Over  Twenty  Years  Behind. 

24 —  The  Most  Successful  Telephone  in  Europe  Privately 
Owned. 

25 —  The  Nearer  to  American  Standards,  the  Better  the  Service. 

26 —  Government  Now  in  Telegraph  Business — The  Results. 

27 —  Telephones  for  the  Masses. 

28 —  Extending  the  Service. 

29 —  Anticipating  the  Public  Requirements. 

30 —  Continuous  Policy. 

31 —  Public  Telephones  and  Mail  Boxes. 

32 —  Would  the  Government  Pay  Commissions  to  Druggists  and 
Other  Public  Telephone  Agents? 


FINANCIAL  ASPECT 

33 —  The  Cost  of  Government  Inefficiency. 

34 —  A  Recent  Canadian  Experience  in  Government  Ownership. 

35 —  Relative  Costs  of  American  and  European  Telephone 
Systems. 

36 —  N o  W ater  in  the  Capitalization  of  the  Bell  Companies. 

37 —  Profits  of  Private  Companies. 

38 —  Public  Utilities  Are  Now  Largely  Owned  by  the  Public. 

39 —  The  Financial  Aspect. 

40 —  A  Panama  Canal  Every  Ten  Years. 

41 —  Emergencies. 

42 —  Largest  Printing  Office  in  the  World. 

43 —  The  Question  of  Taxes. 

WELFARE  OF  EMPLOYEES 

44 —  Welfare  of  Employees. 

45 —  Working  Conditions. 

46 —  How  Another  Great  Department  of  the  Government  is 
Conducted. 

47 —  Telephone  Employees  in  England  say  the  Government  is 
not  a  Good  Employer. 

48 —  The  Dilemma  of  Government  Employment. 

49 —  Discipline. 

50 —  The  Opinion  of  the  Canal  Builder  on  the  Civil  Service. 

GOVERNMENT  METHODS 

51 —  Lack  of  Modern  Methods  in  Government  Enterprise. 

52 —  Antiquated  Methods  on  Government  Owned  Railroads. 

53 —  The  Parcels  Post  and  Wire  Systems. 

54 —  No  Analogy  between  Telephone  and  Mail  Service  as  Now 
Conducted. 

55 —  Failures  in  Government  Ownership. 

56 —  Some  Examples  of  European  Long  Distance  Service. 


THE  AWAKENING. 

The  same  siren  songs  we  are  now  hearing  from  government  own¬ 
ership  advocates  were  sung  several  years  ago  to  the  British  public. 

The  service  was  to  be  better — rates  less — working  conditions 
improved. 

The  awakening  has  come. 

The  service  is  worse. 

Employees  are  threatening  a  general  strike  because  of  miserable 
pay  and  poor  working  conditions. 

The  Postmaster  General  is  apologizing  to  the  public  for  failure 
to  make  any  reductions  in  rates. 

Has  the  experience  of  other  countries  no  lesson  for  us? 


—  1  — 


FAILURES  OF  GOVERNMENT  OWNERSHIP  NOT 

CONFINED  TO  EUROPE. 

We  cannot  say  that  the  government  ownership  failures  in  other 
countries  would  not  occur  with  us. 

The  disastrous  results  of  municipal  ownership  of  public  utilities 
in  many  of  our  cities,  railroad  operation  by  several  of  the  states,  the 
dishonest  and  inefficient  methods  employed  on  New  York  State  road 
work,  the  faulty  planning  of  the  new  Municipal  Building  in  New 
York  City,  all  indicate  what  may  be  expected  from  the  operation  by 
the  government  of  the  vast  and  far  more  complex  telephone  and 
telegraph  systems. 


—  2  — 


NO  NOVELTY  OF  GOVERNMENT  OWNERSHIP  OF 
RAILROADS  IN  UNITED  STATES. 

It  has  probably  escaped  the  notice  of  its  advocates  that  the  idea 
of  government  ownership  and  operation  of  public  utilities  in  this 
country  lacks  even  the  element  of  novelty. 

At  least  three  states,  North  Carolina,  Maryland  and  Texas,  have 
tried  it. 

After  fifty  years  of  political  management,  North  Carolina  leased 
its  railroad  lines  to  a  private  company. 

Maryland  sold  what  was  left  of  the  Western  Maryland  to  the 
Goulds  about  eight  years  ago;  and  Texas  is  now  trying  to  unload  its 
road  upon  some  private  company. 

Not  only  were  these  roads  financial  failures,  but  they  utterly 
failed  to  adequately  serve  the  public. 

Has  the  past  no  lesson? 


THE  EXPERIENCE  OF  OUR  NEIGHBOR. 


On  January  I,  1908,  the  Province  of  Manitoba  purchased  the 
privately  owned  telephone  system,  and  began  operating  it  under  a 
Telephone  Commission. 

The  Prophecy . 

The  Honorable  R.  P.  Roblin,  Premier,  and  Attorney  General 
C.  H.  Campbell  had  promised  better  service  at  half  the  cost. 

The  Fulfillment . 

March  1908 — Rates  in  Winnipeg  for  certain  classes  of  service  were 
increased  25  per  cent. 

February  1909 — Inferior  party  line  service  was  introduced  and  a 
slight  rate  reduction  made. 

March  1910 — Chairman  of  the  Telephone  Commission  declared  the 
rural  rates  inadequate. 

May  1911 — Many  Long  Distance  rates  doubled  and  time  limit  de¬ 
creased  from  3  to  2  minutes. 

November  1911 — Chairman  of  Telephone  Commission  reported  a 
loss  for  the  year  of  $150,000,  without  making  any  provision 
for  depreciation. 

December  1911 — Announcement  of  increase  in  rates  aroused  a  storm 
of  protest. 

March  1912 — Citizens’  Committee  of  Winnipeg  made  an  investiga¬ 
tion,  and  reported  that  the  proposed  increase  was  inequitable. 
June  1912 — Public  distrust  of  the  Telephone  Commission  and  sus¬ 
picions  of  graft  forced  the  appointment  of  a  Royal  Com¬ 
mission,  which  condemned  the  proposed  increases  on  the  ground 
that  “the  system  has  generally  been  administered  extrava¬ 
gantly  and  that  a  very  large  saving  could  be  made  by  economi¬ 
cal  management.”  Telephone  Commission  resigned. 

July  1912 — Increases  of  20  per  cent,  in  rates  for  business  and  resi¬ 
dences  were  announced,  establishing  a  higher  schedule  than 
that  of  the  Bell  Company  before  purchase  by  the  government. 

Commenting  on  the  situation  the  Montreal  Gazette  said:  Some 
of  the  advocates  of  government  ownership  seem  to  have  thought 
that,  having  gotten  the  government  to  take  over  the  service,  it 
would  be  easy  to  get  cheap  telephones  by  putting  a  part  of  the  cost 
on  the  general  taxpayers.  It  is  not  well  to  put  the  cost  of  a  personal 
service  for  some  of  the  people  upon  all  the  people  ” 

Has  this  a  familiar  sound? 


—  4  — 


WORLD  WIDE  INEFFICIENCY  OF  GOVERNMENT 

MANAGEMENT. 


The  trail  of  inefficiency  in  the  management  of  state  enterprises 
leads  from  Western  Canada  to  the  British  Isles,  through  every 
country  on  the  Continent,  across  Asiatic  Russia,  Japan,  Australia, 
and  finally  South  Africa. 

Moreover,  the  lack  of  success  is  entirely  independent  of  the  char¬ 
acter  of  the  enterprise. 

Grain  elevators  and  electric  power  plants  in  Canada,  telephones 
in  England,  matches  in  France,  tobacco  in  Italy,  coal  and  iron  mines 
in  Germany,  and  railroads  in  Russia,  Australia  and  South  Africa, 
are  examples  of  inefficient  government  management.  Even  the  mar¬ 
velous  efficiency  of  the  Japanese  is  powerless  to  overcome  the 
handicap  of  government  management.  35,000  citizens  are  today 
unable  to  obtain  service  from  the  government  telephone  system 
in  the  Japanese  Capitol,  and  “rights”  for  the  next  vacant  line  are 
regularly  traded  in  upon  the  floor  of  the  Tokio  Stock  Exchange. 

In  New  York  City,  during  1913,  42,000  telephones  were  installed 
with  an  average  elapsed  time  of  four  and  one-half  days  and  without 
installation  charge  to  subscribers. 


CHARACTER  OF  SOME  GOVERNMENT  OWNERSHIP 

ARGUMENTS. 


In  an  effort  to  show  that  our  Post  Office  is  the  most  efficient  in 
the  world  and  our  telephone  system  less  efficient  than  some  of  the 
government  owned  systems  in  Europe,  Mr.  Lewis  resorts  to  the  most 
amazing  use  of  statistics. 

The  total  number  of  pieces  of  mail  is  divided  by  the  total  number 
of  government  employees  in  the  various  countries.  He  utterly 
ignores  the  fact  that  a  large  part  of  the  work  of  handling  the  mail 
in  this  country  is  done  by  employees  of  contractors,  while  abroad  it  is 
handled  by  the  post  office  employees  directly.  Naturally,  it  is  not 
surprising  that  the  number  of  pieces  of  mail  handled  per  government 
employee  is  greater  here  than  abroad. 

The  method  of  using  the  telephone  statistics  is  equally  astonish¬ 
ing,  even  assuming  that  the  statistics  themselves  are  correct.  The 
total  number  of  messages,  say  in  Norway  and  this  country,  is  divided 
by  the  total  number  of  employees,  not  only  operators,  but  men  en¬ 
gaged  in  building  pole  lines,  conduits  and  other  construction  work, 
agents  engaged  in  soliciting  new  business,  and  a  large  maintenance 
force  looking  to  the  upkeep  of  the  property  —  something  sadly 
neglected  in  government  owned  systems. 

Again,  the  method  of  computing  calls  may  vary  widely.  In 
some  countries  every  request  for  a  telephone  connection  is  counted; 
in  others,  if  a  subscriber  has  talked  three  minutes  and  wants  to  con¬ 
tinue  the  conversation  he  has  to  get  another  connection  when  he  can, 
and  this  is  again  counted ;  some  countries  also  count  the  message  going 
through  two  exchanges  as  two  messages,  one  for  each,  although  it 
would  be  one  and  the  same  conversation.  Some  countries  compute 
the  number  of  calls  per  subscriber’s  line;  others,  the  calls  per  tele¬ 
phone  station.  In  American  statistics  only  actually  completed  con¬ 
nections  are  counted,  and  the  same  conversation  is  counted  only  once, 
no  matter  how  many  exchanges  it  may  pass  through,  or  how  long  its 
duration. 

Of  course,  in  all  of  this  talk  about  efficiency,  not  one  word  is 
said  about  the  quality  of  the  service  rendered.  The  American  idea 
of  efficiency  is  that  the  operator  be  waiting  to  serve  you — not  you 
waiting  for  the  operator. 

It  is  upon  such  fallacious  arguments  that  the  American  public 
is  asked  to  decide  this  great  question  of  government  ownership  of 
telephone  and  telegraph  systems. 

—  6  — 


THE  OPINION  OF  AN  EXPERT. 


In  1906,  James  Dalrymple,  Manager  of  the  Glasgow  Municipal 
Tramways  and  an  ardent  advocate  of  government  ownership,  made 
a  study  of  conditions  in  this  country.  Upon  the  completion  of  his 
studies,  he  reported  as  follows: 

“I  came  to  this  country  a  believer  in  public  owner¬ 
ship.  What  I  have  seen  here,  and  I  have  studied  the 
situation  carefully,  makes  me  realize  that  private  owner¬ 
ship  under  proper  conditions  is  far  best  for  the  citizen 
of  American  cities.” 


—  7  — 


THE  MANAGERS  OF  GOVERNMENT  OWNED 
SYSTEMS  HAVE  NO  ILLUSIONS. 


The  men  who  have  no  illusions  about  government  ownership,  as 

applied  to  telephone  business,  are  those  engaged  in  operating  the 
government  owned  and  European  systems. 

A  prominent  government  official  connected  with  the  telephone 
administration  of  one  of  these  countries,  recently  said: — 

“After  my  inspection  of  the  equipment  and  obser¬ 
vation  of  the  system  and  the  personnel  of  the  Telephone 
Company  in  New  York,  I  am  in  a  position  to  know 
that  the  telephone  business  is  not  a  government,  but  a 
commercial  enterprise.” 


—  8  — 


MISLEADING  INFORMATION  ON  TELEPHONE 

RATES. 


Quotations  of  rates  for  telephone  service  are  bound  to  be  mis¬ 
leading  when  the  maximum  rates  alone  are  quoted  without  further 
explanation,  leaving  it  to  be  inferred  that  the  quoted  rate  is  the  only 
rate,  or  is  the  average  rate. 

For  example,  advocates  of  government  ownership  and  others 
have  frequently  quoted  the  rate  for  a  single  telephone  line  in  New 
York  City  as  $228.00. 

An  analysis  of  payment  made  by  the  subscribers  for  direct  and 
party  line  exchange  service  in  New  York  City  shows — 

Less  than  one-half  of  1  per  cent,  paying  $228.00  or 
more,  and  these  are  the  very  large  users. 

50  per  cent,  pay  $48.00  or  less. 

A  similar  analysis  of  rates  given  for  such  cities  as  Boston,  Phila¬ 
delphia,  Baltimore  and  Washington  discloses  the  same  condition. 


—  9 — 


COMPARATIVE  COSTS  OF  SERVICE. 


In  comparing  cost  of  service  here  and  in  Europe,  advocates  of 
government  ownership  make  no  mention  of  the  following: 

1.  Wages  and  other  conditions  of  labor. 

2.  Absence  of  taxation  in  the  case  of  European  Gov¬ 
ernment  System. 

3.  Deficit  resulting  from  operation.  (British  service 
last  year  showed  a  loss  of  $5,700,000.) 

4.  Character  of  service. 


Part  time,  instead  of  24-hour  service,  and  long  delayed  toll 
service,  such  as  is  furnished  in  most  of  the  European  government 
owned  systems,  can  be  furnished  in  America  at  cheaper  rates  than  are 
now  necessary,  IF  the  American  public  wants  that  class  of  service. 

Even  ignoring  these  very  important  factors,  the  cost  to  the  pub¬ 
lic  here  and  abroad  is  very  little  different,  as  the  latest  figures,  com¬ 
piled  from  official  sources,  show: 


Toll  and  Exchange  Exchange 
Earnings  Earnings  only 
Per  Station  Per  Station 


Average  State  owned  in  7  leading  Eu¬ 
ropean  countries  . $36.89  $26.78 

Average  Bell  Companies . 40.14  30.93 


Deduct  taxes  and  make  allowances  for  differences  in  purchasing 
power  of  money  here  and  abroad  and  American  rates  are  actually 
lower. 


COMPARATIVE  COSTS  OF  SERVICE. 


The  advocates  of  government  ownership  in  their  comparisons  of 
European  government  owned  systems  with  those  under  private  man¬ 
agement  fail  to  mention  the  absence  of  taxation  in  the  case  of  the 
government  systems,  and  of  course  the  question  of  the  quality  of  the 
service  is  treated  as  entirely  irrelevant. 

As  shown  by  the  following  figures  taken  from  official  records, 
the  average  earnings  per  station,  here  and  aboard,  are  not  materially 
different : 


Country 

Total  Earnings 
per  Station , 

Toll  and  Exchange 

Earnings  per  Sta¬ 
tion ,  Exchange 
Service  only 

Austria . 

_ $34.36 

$24.96 

(1912) 

Belgium  . 

_  49.87 

39.05 

(1911) 

France  . 

_  40.77 

28.61 

(1912) 

German  Empire . 

_  34.58 

22.69 

(1911) 

Great  Britain . 

_ 39.06 

32.60 

(1912) 

Hungary . 

.  41.50 

30.81 

(1912) 

Switzerland  . 

_  29.37 

18.45 

(1912) 

Average  State  Owned 

_  36.89 

26.78 

Bell  Companies . 

_  40.14 

30.93 

(1912) 

This  slight  difference  is  practically  made  up  by  the  one  item  of 

taxation  alone. 


11  — 


SERVICE  DETERMINES  RATE. 

In  no  case  can  it  be  said  that  European  users  pay  lower  rates 
and  get  the  same  service  that  we  do.  In  no  case  does  the  service 
measure  up  to  the  American  standard,  and  this  is  true  even  when 
the  whole  people  are  taxed  for  the  benefit  of  comparatively  few  tele¬ 
phone  users. 


— 12  — 


FACTS  ABOUT  NEW  ZEALAND. 


Mr.  Lewis  states  that  a  twelve  word  telegram  in  New  Zealand 
costs  12  cents,  instead  of  25  cents,  as  with  us.  He  did  not  tell  you 
that  the  12-cent  rate  was  for  “ordinary”  messages,  probably  corre¬ 
sponding  to  our  Day  Letters.  A  cable  inquiring  as  to  rates  in  New 
Zealand  brought  the  following  reply: — 

“New  Zealand  Government  tariffs  for  telegrams 
within  New  Zealand  are — (A)  for  urgent  messages  one 
shilling  for  twelve  words  or  less,  additional  words  one 
penny;  (B)  for  ordinary  messages  sixpence  for  twelve 
words  or  less,  additional  words  one-half  penny.  Ad¬ 
dress  and  signature  counted  and  charged  for.” 

The  National  Debt  of  New  Zealand,  due  to  Socialistic  schemes, 
of  which  the  government  owned  telegraph  is  a  part,  is  $400.00  per 
capita.  At  the  same  rate  the  National  Debt  of  the  United  States 
would  be  thirty-nine  billion  instead  of  about  one  billion  dollars. 


13  — 


SPEED  IN  AMERICAN  SERVICE. 

A  factor  of  good  telephone  service  which  has  been  most  marked 
in  America,  is  promptness.  To  be  of  the  greatest  benefit  to  mankind, 
it  is  necessary  that  the  telephone  should  not  only  annihilate  distance 
but  also  annihilate  time. 

In  local  or  intra-city  service  especially,  the  usefulness  of  the 
telephone  is  impaired  by  delay.  If  a  telephone  connection  can  be 
had  in  a  few  seconds,  which  is  standard  American  practice,  the  tele¬ 
phone  will  be  employed  ten  times  as  often  as  it  is  used  in  countries 
where  delays  of  many  minutes  are  common.  The  American  standard 
of  promptness  is  justified  by  the  volume  of  traffic  it  has  helped 
build  up. 


14  — 


EUROPEAN  LONG  DISTANCE  SERVICE. 

Toll  rates  in  Europe  and  in  America  can  be  compared  as  to 
cheapness  only  after  a  consideration  of  the  extent,  quality,  accuracy 

and  rapidity  of  communication  afforded. 

A  long  distance  call  in  France  can  be  made  only  after  arranging 
for  an  appointment.  A  time  is  set  for  the  call.  If  not  on  hand,  the 
subscriber  loses  his  place  in  the  appointment  list  and  must  make  a 
new  appointment.  If  he  exceeds  his  time  limit,  the  connection  is  cut 
off  while  he  is  still  talking.  In  many  countries  if  a  business  man 
wants  “special  service,”  which  compares  to  our  regular  long  distance 
service,  he  pays  three  times  the  regular  toll  price. 

A  Frenchman  wishing  to  make  an  important  toll  call  recently 
had  to  rise  at  6  o’clock  in  the  morning  in  order  to  get  a  good  position 
on  the  appointment  list.  On  another  day  he  sought  the  appointment 
a  few  hours  later  and  was  confronted  with  a  14-hour  delay. 


—  15  — 


RAPID,  RELIABLE,  CONTINUOUS  SERVICE  IS 
FOUND  ONLY  IN  AMERICA. 


An  ideal  of  the  American  system  is  continuity  of  service. 
To  be  most  useful  the  telephone  service  should  be  available  at  all 
times  both  day  and  night,  and  accidental  breaks  should  be  so  infre¬ 
quent  and  so  quickly  repaired,  that  the  general  reliability  of  the  serv¬ 
ice  becomes  an  accepted  fact.  In  the  eyes  of  our  foreign  neighbors, 
all-night  telephone  service  is  distinctly  an  American  extravagance. 
Yet  when  the  importance  of  a  large  proportion  of  the  night  calls  is 
considered,  the  protective  value  of  telephone  service  would  be  more 
than  cut  in  two  if  the  exchanges  were  closed  at  night.  Part  time 
instead  of  twenty-four-hour  service,  and  long  delayed  toll  service, 
such  as  is  furnished  in  most  of  the  European  government  owned  sys¬ 
tems,  can  be  furnished  in  America  at  cheaper  rates  than  are  now 
necessary,  if  the  American  public  wants  that  class  of  service. 


16  — 


PART  TIME,  OR  CONTINUOUS  SERVICE? 


Part  time,  instead  of  24-hour  service,  and  long  delayed  toll 
service  such  as  is  furnished  by  most  of  the  European  systems,  can  be 
provided  for  the  American  public  at  lower  rates  than  at  present,  if 
that  class  of  service  is  desired.  The  constant  use  of  the  telephone  as 
a  quick  medium  for  transacting  business  and  social  matters  makes 
the  change  undesirable  in  this  country  where  the  public  is  used  to 
rapid  service. 


17 


SERVICE  DELAYS. 

Rush  hours  in  American  telephone  service  bring  to  bear  tremend¬ 
ous  pressure  upon  personnel  and  equipment,  yet  the  service  is  un¬ 
interrupted  and  is  conducted  as  smoothly  as  under  ordinary  condi¬ 
tions. 

Post  office  service  has  no  such  rush  hour  facilities.  Long  lines 
of  people  waiting  impatiently  for  the  privilege  of  buying  a  stamp 
are  daily  sights  in  our  post  offices.  Yet  the  post  office  is  compared 
for  efficiency  with  privately  owned  telephone  systems. 


—  18 


COMPLAINTS. 

How  effective  would  be  complaints  under  government  owner¬ 
ship?  The  private  companies  investigate  complaints  promptly  and 
thoroughly,  for  by  removing  their  causes,  better  service  and  more 
business  is  possible. 

There  now  are  public  service  commissions  as  courts  of  resort  for 
complainants.  Under  government  ownership,  Congress  or  the  Post 
Office  Department  would  be  a  court  of  last  resort  beyond  which  ap¬ 
peal  could  not  be  taken. 

The  strong  motive  of  self  interest  in  rendering  service  would 
be  removed. 


—  19 


THE  MAINSTAY  OF  BUSINESS. 

It  would  be  hard  to  find  a  line  of  business  where  progress  would 
not  be  seriously  retarded  by  an  impairment  of  the  present  telephone 
efficiency.  Each  man,  whatever  his  business  may  be,  can  very  quickly 
determine  what  it  would  mean  to  him  to  do  without  the  telephone 
or  to  put  up  with  a  service  that  does  not  measure  up  to  the  American 
standard. 


—  20 


THE  OPINION  OF  AN  AMERICAN  ABROAD. 

A  Philadelphia  business  man,  residing  this  winter  near  Nice, 
France,  says  in  a  letter  to  an  American  newspaper: 

“I  feel  satisfied  if  any  of  the  gentlemen  who  are  advocating 
government  control  of  the  telephone  and  telegraph  lines  in  the  United 
States  would  come  and  live  in  France  for  a  few  months,  that  he  would 
pray  for  any  ownership  rather  than  that  of  the  government.” 

Americans  who  have  had  experience  with  the  government  owned 
systems  abroad  are  strong  supporters  of  the  privately  owned  tele¬ 
phone  systems  in  this  country.  “Ask  the  man  who  has  used  both.” 


21  — 


GOVERNMENT  AND  PRIVATE  OPERATION  IN  THE 

SAME  FIELD. 


The  best  managed  railroad  in  France  is  the  privately  operated 
Paris,  Lyons  and  Mediterranean,  and  the  worst,  the  Western,  a  gov¬ 
ernment  operated  system.  The  service  on  this  line  was  so  bad  a  few 
years  ago  that  the  Transatlantic  Steamship  Companies  threatened 
to  abandon  the  port  of  Cherbourg. 

The  Swedish  government  operates  a  telephone  system  in  Stock¬ 
holm.  So  does  a  privately  owned  company.  Rates  for  both  services 
are  practically  the  same. 

The  government  system  has  25,000  subscribers. 

The  private  system  has  56,000  subscribers. 

As  Mr.  Post  would  say:  “There’s  a  reason.” 


22  — 


EUROPE  OVER  TWENTY  YEARS  BEHIND. 


It  was  an  epoch  in  the  world’s  history  when  the  Bell  system 
opened  a  long  distance  line  between  New  York  and  Chicago  and 
demonstrated  that  speech  could  be  transmitted  for  1,000  miles  across 
country.  Today  these  cities  are  connected  by  a  number  of  such  lines 
and  any  one  of  the  500,000  telephones  in  New  York  can  be  connected 
with  any  one  of  the  300,000  Bell  telephones  in  Chicago.  These 
American  cities  were  linked  by  the  Bell  system  at  the  time  of  the 
World’s  Fair,  twenty  years  ago.  The  first  900  mile  line  in  Europe 
has  been  opened  within  the  last  year,  nearly  a  year  after  the  2,000 
mile  line  between  New  York  and  Denver  was  in  operation. 


THE  MOST  SUCCESSFUL  TELEPHONE  IN  EUROPE 

PRIVATELY  OWNED. 


It  is  a  significant  fact  that  the  most  successful  telephone  system 
in  Europe  is  operated  by  a  private  company  in  the  capital  of  Den¬ 
mark.  Note  the  following  comparison  between  it  and  the  State  owned 
companies  in  other  European  cities  of  the  same  size: — 


Telephones  per 


Population 

100  Popuh 

Copenhagen,  Denmark  .  .  . 

. 608,000 

8.4 

Munich,  Germany  . 

. 606,000 

5.5 

Leipsic,  Germany . 

. 617,000 

4.6 

Dresden,  Germany  . 

. 558,000 

4.3 

Marseilles,  France . 

. 565,000 

1.4 

Lyons,  France . 

....  547,000 

1.3 

Antwerp,  Belgium  . 

. 487,000 

1.6 

Naples,  Italy . 

. 723.000 

.5 

Budapest,  Hungary . 

. 880,000 

2.8 

—  24  — 


THE  NEARER  TO  AMERICAN  STANDARDS,  THE 

BETTER  THE  SERVICE. 


Sweden,  Norway  and  Denmark  have  given  more  freedom  to  pri¬ 
vate  initiative  than  the  other  important  European  countries,  so  that 
the  American  standard  of  telephone  practice  has  been  more  closely 
approached,  and  the  telephone  development  in  proportion  to  popula¬ 
tion  is  greater  than  in  any  other  countries  of  the  Old  World. 

The  development  of  the  telephone  in  Sweden  is  not  due  so  much 
to  the  progressiveness  of  the  state  as  to  the  genius  of  Henry  Ceder- 
gren,  who  founded  the  Stockholm  General  Telephone  Company  in 
1882,  and  remained  at  its  head  until  his  death  twenty-seven  years 
later.  This  company,  now  the  Stockholm  Telephone  Company,  still 
operates  in  Stockholm  and  vicinity  in  competition  with  the  state 
system,  and  the  company  not  only  has  twice  as  many  telephones  in 
Stockholm  as  has  the  state,  but  it  has  about  one-third  of  all  the  tele¬ 
phones  in  Sweden.  It  is  further  worthy  of  note  that  the  govern¬ 
ment  has  twice  petitioned  Parliament  for  authority  to  acquire  the 
company,  but  each  time  Parliament  withheld  its  consent  on  the 
ground  that  the  transaction  would  not  be  a  paying  proposition. 


—  25 


GOVERNMENT  NOW  IN  TELEGRAPH  BUSINESS— 

THE  RESULTS. 


Many  people  are  not  aware  that  the  government  has  operated  a 
telegraph  system  of  4,600  miles  in  Alaska  for  the  last  ten  years. 
This  is  the  result: 

Mile  for  mile  charges  are  280  per  cent.,  or  nearly  three  times 
those  charged  by  private  companies  in  the  United  States;  as  for  ex¬ 
ample  : 


System 

Distance 

M  ties 

Charge  for 
10  Words 

Seattle  to  Nome . 

.  Government 

2,340 

$3.80 

Seattle  to  New  York. . 

.  Private 

3,000 

1.00 

Seattle  to  Berlin . 

.  Private 

5,000 

2.90 

Even  at  the  high  rates  charged,  the  financial  results  of  the  gov¬ 
ernment  owned  Alaska  telegraph  system  for  1911  were  as  follows: 

Earnings . $344,300 

Expenses  .  372,800 


26  — 


TELEPHONES  FOR  THE  MASSES. 

It  is  argued  that  government  ownership  will  extend  telephone 
service  to  the  homes  of  the  masses. 

Sydney  Brooks,  in  a  London  daily  newspaper,  contrasts  the 
American  and  European  systems  in  this  way: 

“In  the  whole  United  Kingdom  there  are  only  about  as  many 
telephones  as  there  are  in  New  York  and  Chicago. 

“In  all  France,  less  than  Chicago. 

“In  all  Austria,  less  than  Boston. 

“In  all  Russia,  less  than  Philadelphia. 

“In  all  Italy,  less  than  Los  Angeles.” 

During  the  year  1913,  the  net  increase  in  just  two  Boroughs  of 
New  York  City  was  28,000  stations,  or  within  1,000  of  the  net  gain 
for  the  year  ending  March  31,  1913,  in  the  government  owned  system 
covering  the  whole  of  Great  Britain. 

Which  system  of  ownership  and  operation  is  providing  telephone 
service  for  the  greater  proportion  of  the  population? 


27  — 


EXTENDING  THE  SERVICE. 

Widespread  publicity,  advertising  and  canvassing  by  private 
companies,  have  done  much  to  develop  the  use  of  the  telephone  in  the 
United  States.  The  value  of  the  service  has  been  driven  home  to  the 
public.  New  ways  of  using  the  telephone  have  been  exploited  and 
the  people  have  been  taught  to  depend  more  upon  it  with  a  resulting 
expansion  of  telephone  utility. 

The  government  neither  advertises  nor  canvasses  for  business. 
Under  federal  ownership,  telephone  growth,  which  naturally  makes 
the  service  more  and  more  valuable  to  all  users,  would  proceed  less 
rapidly. 


28 


ANTICIPATING  THE  PUBLIC  REQUIREMENTS. 

In  order  to  provide  a  comprehensive  telephone  plant  to  meet  the 
growing  needs  of  the  country  served,  it  is  necessary  to  make  plans 
years  ahead.  This  means  a  permanent  management  and  a  fixed  policy. 

Because  of  the  absence  of  this  in  government  owned  systems 
we  find — 

35,000  citizens  unable  to  obtain  service  in  Tokio,  and  5,000  in 
Budapest. 


29 


CONTINUOUS  POLICY. 

The  growth  and  development  of  any  large  public  utility  depends 
in  a  large  measure  upon  the  continuous  policy  that  takes  into  account 
the  consistent  building  up  of  the  business  by  making  careful  provision 
for  the  future. 

The  tenure  of  office  of  executives  in  the  government  employ  is 
largely  controlled  by  the  political  fortunes  of  the  party  in  power. 

What  assurance  has  the  public  that  a  government  owned  tele¬ 
phone  system  would  be  guided  by  a  continuous  policy? 


PUBLIC  TELEPHONES  AND  MAIL  BOXES. 

If  the  city  of  New  York  were  as  inadequately  supplied  with 
public  telephone  stations  as  it  is  with  mail  boxes,  and  the  Telephone 
Company  did  not  provide  additional  facilities  upon  complaint  of  the 
public,  the  company  would  be  properly  ordered  to  do  so  by  the  Public 
Service  Commission.  But  what  redress  has  the  public  in  the  case  of 
the  post  office?  Complaints  of  lack  of  letter  boxes  have  been  frequent 
enough  during  the  past  years,  but  no  result  is  apparent. 


—  31  — 


WOULD  THE  GOVERNMENT  PAY  COMMISSIONS  TO 
DRUGGISTS  AND  OTHER  PUBLIC 
TELEPHONE  AGENTS? 


In  New  York  City  the  Blue  Bell  public  telephone  signs  stare 
one  in  the  face  wherever  one  may  turn.  In  many  sections  of  the  city, 
on  the  other  hand,  block  after  block  must  be  traversed  before  one  can 
find  the  facilities  for  buying  a  stamp  or  mailing  a  letter. 

By  paying  a  commission  to  druggists  and  other  retailers,  the 
Telephone  Company  has  provided  extensive  and  handy  telephone 
facilities  for  the  general  public. 

For  the  neighborhood  sale  of  postage  stamps,  the  government 
relies  upon  the  good  nature  of  the  average  corner  druggist.  For  his 
trouble  the  druggist  receives  no  compensation.  If  the  government 
were  to  extend  the  same  “no  profit”  policy  to  the  druggist  and  others 
who  would  have  public  telephones,  a  mighty  shrinkage  in  the  present 
development  of  public  telephone  facilities  would  take  place. 


THE  COST  OF  GOVERNMENT  INEFFICIENCY. 

A  few  years  ago  a  distinguished  senator  made  the  statement 
which  has  not  been  seriously  challenged,  that  the  Federal  Govern¬ 
ment  wasted  through  inefficiency  $300,000,000  in  the  annual  expendi¬ 
ture  of  $1,000,000,000. 

It  is  a  part  of  this  same  government  organization  which  the  ad¬ 
vocates  of  government  ownership  claim  can  operate  the  complex 
telephone  and  telegraph  system  at  a  saving  of  one-third  over  the  pres¬ 
ent  costs. 


33  — 


A  RECENT  CANADIAN  EXPERIENCE  IN  GOVERN¬ 
MENT  OWNERSHIP. 


The  Canadian  people  were  induced  several  years  ago  to  consent 
to  the  construction  by  the  government  of  the  National  Transcon¬ 
tinental  Railway,  1,300  miles  long.  Recently  an  Investigating  Com¬ 
mission  has  been  holding  an  inquest  on  the  project,  and  these  are 
its  conclusions: 

1 —  We  find  that  without  including  the  money  unneces¬ 
sarily  expended  in  building  the  railway  east  of  the 
St.  Lawrence  River,  $40,000,000,  at  least,  was 
needlessly  expended  in  the  building  of  this  road. 

2 —  No  member  of  the  Railway  Commission  had  any 
experience  or  knowledge  of  railway  building  or 
operation.  The  road  standard  was  decided  on  with¬ 
out  any  knowledge  as  to  whether  or  not  it  was  suit¬ 
able  for  the  country  and  on  assumptions  as  to  busi¬ 
ness  expected,  which  were  unwarranted. 

3. — The  original  estimate  of  the  cost  of  the  road  was 
$61,400,000. 

The  cost  to  September  30,  1911,  $109,000,000. 

Estimated  total  cost  when  completed  $161,300,000. 

The  Commission  finds  that  huge  sums  were  made  by  sub-letting 
and  that  the  original  forms  of  tenders  restricted  bidding  to  a  few  big 
contractors,  eleven  firms  having  made  about  $9,000,000  without  doing 
a  stroke  of  work. 


—  34  — 


RELATIVE  COSTS  OF  AMERICAN  AND  EUROPEAN 

TELEPHONE  SYSTEMS. 


In  view  of  the  statements  of  some  of  the  government  ownership 
advocates  that  the  Bell  Company’s  plant  is  overcapitalized,  the  fol¬ 
lowing  figures  for  European  countries  (State  systems  only)  are  signi¬ 
ficant: 


Average  Investment 


Country  per  Station  Year 

Austria . $211.00  1912 

Belgium .  276.00  1912 

France  .  257.00  1912 

German  Empire .  178.00  1911 

Hungary  .  192.00  1912 

Switzerland . 190.00  1912 

U.  S.  Bell . 143.00  1913  (Jan.  1) 


This  in  spite  of  the  fact  that  labor  and  all  material,  except  cop¬ 
per,  is  much  higher  here  than  abroad. 


—  35  — 


NO  WATER  IN  THE  CAPITALIZATION  OF  THE  BELL 

COMPANIES. 

That  there  is  no  water  in  the  capitalization  of  the  Bell  Com¬ 
panies  is  admitted  even  by  the  opponents  of  private  ownership.  Rep¬ 
resentative  Lewis,  of  Maryland,  in  his  speech  before  the  Republican 
Club  of  New  York  City,  on  January  31,  1914,  said: 

“Be  it  said  for  the  Bell  Telephone  System,  that  it  is  the  one 
great  corporation  in  our  country  that  has  not  issued  tons  of  counter¬ 
feit  capital.  Its  stocks  and  bonds  today  represent  the  actual  contri¬ 
butions  of  its  shareholders  in  money  to  a  great  common  enterprise, 
and  we  will  not  have  that  unfortunate  circumstance  (overcapitaliza¬ 
tion)  to  deal  with  in  the  valuation  of  their  properties.” 

Not  only  is  there  no  overcapitalization,  but  the  value  of  the 
property  greatly  exceeds  the  stocks  and  bonds  outstanding  against  it. 
The  earnings  for  the  year  1912  produced  the  moderate  return  of  6 
percent,  on  this  investment. 


36 


PROFITS  OF  PRIVATE  COMPANIES. 

One  argument  heard  in  favor  of  government  ownership  is  the 
alleged  large  profit  made  by  privately  owned  telephone  and  telegraph 
companies. 

The  reports  of  the  Bell  System  for  1912,  based  on  the  method 

of  accounting  prescribed  by  the  Interstate  Commerce  Commission, 
show  earnings  of  6  per  cent,  on  the  actual  investment. 

The  telephone  business  has  produced  no  millionaires. 


37  — 


PUBLIC  UTILITIES  ARE  NOW  LARGELY  OWNED  BY 

THE  PUBLIC. 

Advocates  of  government  ownership  seem  to  overlook  the  fact 
that  public  utilities  are  now  largely  owned  by  the  people. 

For  example,  more  than  50,000  stockholders,  men  and  women, 
own  the  Bell  System,  and  of  these  stockholders  more  than  43,500 
hold  less  than  100  shares  each.  The  same  condition  holds  true  in  all 
the  large  railroad  systems  and  public  utilities. 

It  is  an  axiom  that  “everybody’s  business  is  nobody’s  business.” 
Then  why  assume  that  a  telephone  system  owned  by  all  the  people 
through  their  government  would  be  more  efficiently  and  economically 
conducted  than  would  be  a  system  owned  by  a  responsible  group  of 
stockholders  who  are,  after  all,  a  substantial  part  of  the  general 
public  ? 


—  38 


THE  FINANCIAL  ASPECT. 

A  federal  bond  issue  of  approximately  $2,000,000,000  would 
be  required  to  purchase  the  telephone  and  telegraph  system. 

The  federal  government,  it  is  stated,  can  borrow  money  at  3  per 
cent.  Its  present  3  per  cent,  bonds  are  selling  around  par  only  be¬ 
cause  the  issue  is  small.  A  federal  bond  issue  of  $2,000,000,000  would 
be  likely  to  place  the  credit  of  the  government  on  a  4  per  cent,  basis. 

It  is  for  similar  reasons  that — 

3  per  cent.  French  Government  bonds  sell  at  82. 

3  per  cent.  German  Government  bonds  sell  at  76. 


—  39  — 


A  PANAMA  CANAL  EVERY  TEN  YEARS. 


The  Bell  System  plans  to  spend  $60,000,000  in  1914  in  extend¬ 
ing  its  lines  and  plant.  Since  work  began  on  the  Panama  Canal  in 
1904,  the  Bell  System  has  spent  more  money  to  extend  its  lines  and 
plant  than  the  United  States  Government  has  spent  to  dig  the  big 
ditch  and  buy  the  right  of  way. 

Would  Congress  duplicate  the  appropriations  for  the  Panama 
Canal  every  ten  years  for  the  purpose  of  extending  the  telephone  and 
telegraph  service?  Has  any  country  owning  its  wire  service  made 
proportionate  appropriations  for  this  purpose? 


EMERGENCIES. 


In  the  winter  of  1913,  a  severe  sleet  storm  swept  over  the  lake 
region  from  Chicago  to  Buffalo,  causing  damage  amounting  to  a 
half  million  dollars. 

It  was  vitally  necessary  for  the  business  interests  of  this  section 
that  services  should  be  restored  at  the  earliest  possible  moment. 

Thousands  of  men  and  trainloads  of  material  were  at  once  rushed 
to  the  affected  territory.  The  situation  was  quickly  met  and  the 
services  restored. 

Wire  using  companies  meet  such  crises  every  year.  No  red  tape 
has  to  be  unwound.  There  is  no  wait  until  Congress  passes  an  emer¬ 
gency  appropriation. 

If  the  government  takes  over  the  telephone  and  telegraph  sys¬ 
tems,  will  Congress  delegate  authority  to  the  Post  Office  Depart¬ 
ment  to  spend  millions  for  emergency  demands  without  the  customary 
debate  and  delay  in  sending  appropriations  through  the  usual 
channels  ? 


41 


LARGEST  PRINTING  OFFICE  IN  THE  WORLD. 

The  Government  Printing  Office  at  Washington  spent 
$6,000,000  for  labor  and  material  during  the  fiscal  year  ending  June 
30,  1912.  The  official  report  shows  that  the  government  spent  just 
$18,812.35  during  the  same  period  for  new  and  improved  equipment 
in  the  largest  printing  office  in  the  world.  Yet  we  are  told  by  some 
advocates  of  government  ownership  that  the  government  is  more 
progressive  than  private  corporations  in  adopting  new  and  improved 
methods. 


—  42  — 


THE  QUESTION  OF  TAXES. 

During  1913  the  Bell  System  alone  paid  $12,000,000  in  taxes  to 
the  federal  government  and  to  the  various  states  and  municipalities. 

The  government  pays  no  taxes,  even  on  its  real  estate. 

Government  ownership  would  mean  that  the  $12,000,000  now 
contributed  by  telephone  companies  to  the  government  and  to  the 
various  cities,  towns  and  villages,  would  have  to  be  raised  by  additional 
taxation  of  the  whole  people,  whether  they  are  telephone  subscribers 
or  not. 

Deficits  in  a  government  owned  system  must  be  met  by  taxation 
of  user  and  non-user  alike. 


—  43  — 


WELFARE  OF  EMPLOYEES. 

The  federal  government  is  far  behind  the  privately  owned  tele¬ 
phone  enterprises  in  caring  for  the  welfare  of  its  employees.  It  pro¬ 
vides — 

No  Old  Age  Pensions. 

No  Sick  Benefits. 

No  Death  Benefits  or  Insurance. 

What  effect  will  government  ownership  of  the  telephone  enter¬ 
prise  have  upon  the  thousands  now  benefiting  from  these  welfare 
provisions  ? 


—  44 


WORKING  CONDITIONS. 

The  Bell  Telephone  Company  alone  has  been  awarded  four 
medals  by  international  expositions,  for  providing  healthful,  pleasant 
working  conditions  for  its  employees  and  caring  for  their  present  and 
future  welfare. 

Recently  the  Postmaster  of  New  York  City,  in  replying  to  criti¬ 
cisms  that  women  were  not  given  employment,  stated  that  the  condi¬ 
tions,  sanitary  and  otherwise,  in  the  New  York  Post  Office  building, 
made  it  an  unfit  place  for  women  to  work  in. 

How  long  would  a  privately  owned  public  utility  be  permitted 
to  maintain  such  conditions? 


—  45 


HOW  ANOTHER  GREAT  DEPARTMENT  OF  THE 
GOVERNMENT  IS  CONDUCTED. 


Those  who  are  interested  in  the  matter  of  government  manage¬ 
ment  should  read  the  article  by  William  Hard,  in  “Everybody’s 
Magazine”  for  February,  1914,  dealing  with  the  conduct  of  the  great 
patent  office.  Here  are  a  few  of  his  conclusions: 

“The  (Patent)  Office  is  undermanned,  underpaid,  under¬ 
equipped,  and  vilely  housed,  thwarted  in  its  supreme  service  to  Ameri¬ 
can  business  and  even  perverted  from  that  service  by  the  costly 
economy  of  the  Congress  of  the  United  States. 

“The  money  Congress  ought  to  spend  and  does  not  spend  in  the 
Patent  Office  is  one  of  the  heaviest  burdens  it  lays  on  the  business 
of  the  country.” 

The  building  in  which  the  Patent  Office  is  located  is  so  bad 
that  the  Commission  on  Economy  and  Efficiency  said:  “Any  perma¬ 
nent  improvement  in  the  work  done  by  the  office  must  wait  upon  the 
provision  being  made  for  adequate  office  accommodations.” 

“Next,  having  done  our  best  to  depress  the  Patent  Office  staff 
by  bad  air  and  by  bad  light  and  by  lack  of  space,  we  turn  our  atten¬ 
tion  to  finding  a  way  to  disrupt  it.  The  staff  of  examiners  in  the 
Patent  Office  is  the  most  important  one  single  human  element  in  the 
whole  Patent  System.  We  reward  it  so  meagerly  that  each  year  a 
large  section  of  it  resigns  to  go  to  work  for  the  heartless  private  ex¬ 
ploiters  of  labor.” 

The  highest  reward  a  Patent  Examiner  has  to  look  forward  to 
is  the  position  of  Principal  Examiner.  He  seldom  reaches  this  in  less 
than  eight  or  ten  years — more  frequently  twenty  or  thirty,  and  his 
salary  then  would  be  just  $2,700  per  year. 


46 


TELEPHONE  EMPLOYEES  IN  ENGLAND  SAY  THE 
GOVERNMENT  IS  NOT  A  GOOD  EMPLOYER. 


Telephone  workers  taken  over  by  the  British  Government  when 
it  purchased  the  National  Telephone  Company  met  recently  at  Man¬ 
chester,  England,  to  protest  against  their  experiences  as  government 
employees.  They  declared  that  the  government  touted  as  the  “ideal 
employer,”  has  broken  its  promises  to  them,  has  underpaid  them 
and  has  made  promotions  on  the  ground  of  favoritism  and  not  service. 

The  Manchester  (Eng.)  Chronicle  says:  “The  ‘ideal  employer’ 
is  in  many  cases  demanding  lower  wages  and  longer  hours  than  the 
old  company  found  necessary  to  successfully  work  the  system. 

“When  the  company’s  employees  were  taken  over,  promotion 
was  promised  on  the  basis  of  work  done,  but  despite  the  fact  they 
had  had  in  their  hands  an  overwhelming  proportion  of  the  telephone 
exchanges  and  lines  throughout  the  country,  very  few  of  the  superior 
positions  have  been  given  to  them.  Out  of  857  appointments  in  the 
engineering  department  alone,  all  but  44  have  been  given  to  men 
previously  employed  by  the  Post  Office.  Here,  again,  we  have  an 
example  of  broken  promises  and  favoritism  unworthy  of  this  ‘model 
employer.’ 

“The  hardship  in  this  case  is  increased  by  the  fact  that  the  com¬ 
pany’s  employees  had  no  say  in  the  matter  of  transfer  and  the  ma¬ 
jority  would  have  been  delighted  if  the  state  had  not  annexed  them. 
Neither  are  the  public  any  better  pleased  with  the  change,  and  the 
net  result  of  the  transfer  has  been  another  proof  of  the  unsatisfactory 
character  of  the  much-vaunted  state  service” 

Have  we  any  reason  to  believe  that  telephone  workers  in  this 
country  would  be  treated  any  better  by  the  government  as  employer 
than  the  English  Government  has  treated  their  telephone  worker? 


—  47  — 


THE  DILEMMA  OF  GOVERNMENT  EMPLOYMENT. 

Government  employees  must  either  be  protected  by  civil  service 
or  become  the  prey  of  predatory  politics.  With  all  its  merits  civil 
service  tends  to  destroy  individual  initiative,  lessen  the  sense  of  re¬ 
sponsibility  and  generally  makes  for  inefficiency. 

This  is  a  fundamental  defect  in  the  management  of  all  govern¬ 
ment  enterprises,  whether  municipal,  state  or  federal. 


48 


DISCIPLINE. 

It  is  a  recognized  principle  of  good  business  management  that 
strict  discipline  must  be  maintained  by  executives  over  the  force. 

A  large  body  of  office  holders,  protected  by  civil  service,  report¬ 
ing  to  executives  who  owe  their  appointments  to  political  preferment 
and  who  are  unable  to  remove  subordinates  except  by  means  of  round¬ 
about  charges  and  red  tape,  would  create  a  condition  where  it  would 
be  difficult  to  maintain  discipline. 

A  lapse  in  discipline  in  a  large  public  utility  like  the  telephone 
system  would  be  harmful  to  the  rendering  of  the  best  possible  service, 
and  under  government  ownership  there  are  few  safeguards  against 
frequent  insubordination,  where  employees  of  different  classes  and 
rank  receive  their  appointments  by  different  methods. 


—  49 


THE  OPINION  OF  THE  CANAL  BUILDER  ON  THE 

CIVIL  SERVICE. 


Colonel  Goethals,  in  his  letter  of  January  14th,  addressed  to 
Mayor  Mitchell,  regarding  the  Police  Commissionership  of  the  City 
of  New  York,  points  out  the  vital  weakness  of  trying  to  obtain  results 
without  the  power  to  compel  service. 

“Attractive  as  your  offer  is  I  would  be  obliged  to 
decline  it  so  long  as  the  present  law  remains  in  force  by 
which  removals  from  the  police  force  are  subject  to  re¬ 
view,  with  decision  based  on  legal  evidence.  In  public 
work  of  any  kind  efficiency  can  be  secured  only  when  the 
service  of  those  engaged  in  it  is  satisfactory  to  superiors, 
and  while  I  fully  believe  in  the  right  of  every  man  to 
have  a  hearing,  the  decision  of  the  superior  as  to  the 
character  of  the  man’s  service  should  be  final. 

“In  cases  where  a  man  whose  services  have  not  been 
satisfactory  can  be  reinstated  by  a  court  of  review  the 
effect  on  discipline  and  efficiency  is  most  injurious.  It 
undermines  authority,  leads  to  insubordination,  tends  to 
destroy  the  loyal  co-operation  which  the  executive  au¬ 
thority  must  have  to  secure  results  and  makes  his  tenure 
of  office  impossible.” 

This  fault  is  inherent  in  the  management  of  all  government 
enterprises  and  would  itself  be  sufficient  to  wreck  the  service  of  a 
government  owned  telephone  system. 


50  — 


LACK  OF  MODERN  METHODS  IN  GOVERNMENT 

ENTERPRISE. 


It  has  been  suggested  that  the  government  would  be  quicker  to 
adopt  new  inventions  and  methods  than  would  a  private  company. 

The  following  extract  from  the  preliminary  report  of  the  Joint 
Commission  on  Business  Methods  of  the  Post  Office  Department  and 
Postal  Service,  February  10,  1908,  is  enlightening  on  this  point: 


“The  work  of  the  Department  and  its  development 
is  hindered  all  along  the  line  by  slavish  adherence  to  old 
methods  and  to  precedents  created  in  previous  years,  and 
many  reforms  which  might  otherwise  be  instituted  are 
hindered — if  not  entirely  prevented — by  appeals  to  the 

decision  of  the  Comptroller,  made  perhaps  many  years 
ago  under  entirely  different  conditions.  Then,  again, 

the  conservatism  of  government  officials  is  a  generally 
admitted  fact.  There  is  no  inducement  to  employees 

to  suggest  improvements  in  the  service  for  the  reason 
that  if  these  improvements  result  in  greater  efficiency 
or  economy  of  administration,  they  will  receive  little 
credit,  and,  on  the  other  hand,  if  new  methods  are  not 
successful  they  will  be  charged  with  the  whole  blame. 
Moreover,  to  suggest  improvements  which  will  result 
in  economy  is  to  create  hostility  among  other  members 
of  the  organization,  whose  services  may  thereby  be 
rendered  unnecessary.  On  the  other  hand,  a  clerk  who 
adheres  to  the  routine  which  existed  prior  to  his  appoint¬ 
ment  will  be  left  undisturbed  and  will  receive  credit  by 
performing  his  duties  with  even  a  slight  degree  of  effi¬ 
ciency  and  accepting  without  comment  methods  which 
have  been  handed  down  from  earlier  generations.” 


—  51  — 


ANTIQUATED  METHODS  ON  GOVERNMENT  OWNED 

RAILROADS. 

How  many  people  in  this  country  know  that  cars  are  still  coupled 
by  hand  on  the  government  railroads  of  Europe,  and  that  an  Inter¬ 
national  Commission  this  year  reported  against  automatic  couplers, 
such  as  have  been  used  on  the  American  roads  for  many  years,  on 
account  of  the  expense  of  making  the  change? 

Yet  we  are  told  that  government  management  would  be  more 
progressive  than  that  of  private  ownership. 


—  52  — 


I 

THE  PARCELS  POST  AND  WIRE  SYSTEMS. 

The  analogy  has  been  drawn  between  the  Parcels  Post  and  the 
telephone  and  telegraph  systems. 

No  equipment  is  provided  by  the  government  to  handle  this  mail 
matter.  The  public  carries  the  packages  to  the  Post  Office,  a  private 
company  operates  the  mail  wagons  and  delivers  the  packages  to  the 
railroads,  which  furnish  the  cars  and  other  equipment  and  carry  them 
to  their  destination. 

The  government  merely  sorts  and  routes  and  distributes  the 
packages  at  the  receiving  end. 

The  Post  Office  lacks  any  organization  or  equipment  for  provid¬ 
ing  telephone  and  telegraph  service.  This  analogy  applied  even  to 
the  telegraph  business  would  mean  that  the  public  would  deliver  its 
telegrams  to  the  Post  Office  where  they  would  be  turned  over  to  a 
private  company  to  be  transmitted  to  the  Post  Offices  at  their  destina¬ 
tions.  Messenger  boys  would  deliver  the  telegrams. 

The  government  could  furnish  the  messenger  boys. 


—  53 


NO  ANALOGY  BETWEEN  TELEPHONE  AND  MAIL 

SERVICE  AS  NOW  CONDUCTED. 

The  Bell  Companies  alone  own  and  operate,  in  connection  with 
its  business,  equipment  to  the  value  of  $765,000,000. 

The  Post  Office  Department  does  not  own  even  the  post  office 
buildings  it  occupies;  the  mail  cars  belong  to  the  railroads;  the 
pneumatic  tubes,  in  cities  like  New  York,  and  even  the  mail  wagons, 
are  owned  and  operated  by  private  companies. 

The  construction  and  operation  of  the  vast  and  complex  tele¬ 
phone  system  is  an  entirely  different  problem  from  collecting  and 
delivering  the  mail. 


—  54 


FAILURES  IN  GOVERNMENT  OWNERSHIP. 


In  the  New  York  Sun  of  February  17th,  Albert  R.  Gallatin 
wrote: 

“Since  the  French  Government  took  over  the  West¬ 
ern  Railway  its  service  has  depreciated  and  the  number 
of  employees  has  greatly  increased.  New  Zealand  pur¬ 
chased  the  railways  with  4  per  cent,  bonds  and  the  in¬ 
vestment  under  government  ownership  has  never  re¬ 
turned  more  than  3  per  cent.  This  service  is  also  miser¬ 
able.  The  Italian  Government  is  planning  a  large  loan 
to  reconstruct  its  railways,  which  are  a  joke.  It  has  just 
come  to  light  that  $40,000,000  has  been  wasted  by  the 
Canadian  Government  in  building  the  eastern  extension 
of  the  Grand  Trunk  Pacific.  The  Intercolonial  Railway 
is  operated  at  a  loss.  The  Prussian  Government  grants 
special  rates  to  the  Silesian  mine  owners  in  order  to  com¬ 
pete  with  Welsh  coal  at  North  Sea  ports.  The  Panama 
Railroad,  controlled  by  the  United  States  Government, 
charges  more  for  service  than  any  other  railroad  in  the 
world.  The  New  York  Municipal  Ferry  annually 
shows  a  deficit. 

“In  spite  of  the  fact  that  the  Post  Office  Depart¬ 
ment  charges  no  interest  against  its  investment  and  is 
underpaying  the  railways  for  carrying  the  mails,  it  is 
trying  to  advance  the  rate  for  carrying  magazines;  an¬ 
other  branch  of  the  government  is  attempting  at  the 
same  time  to  prevent  an  advance  in  rates  on  our  pri¬ 
vately  owned  railroads,  which  are  under  the  necessity 
of  remaining  solvent.  The  telephone  and  telegraph 
systems  under  private  management  in  this  country  are 
vastly  superior  to  those  owned  and  operated  by  the  gov¬ 
ernment  in  England  and  on  the  Continent. 

“Are  these  facts  which  I  have  cited  to  be  advanced 
as  arguments  in  favor  of  government  ownership  of 
public  utilities?  Favoritism,  rebating,  graft,  ineffi¬ 
ciency,  financial  loss  and  depreciated  service  are  every¬ 
where  the  result  of  government  ownership  of  railroads, 
telephones  and  telegraphs. 

“Will  this  country  profit  by  the  experience  of 
others?  I  am  inclined  to  think  it  will.” 


55 — 


SOME  EXAMPLES  OF  EUROPEAN  LONG  DISTANCE 

SERVICE. 


The  kind  of  long  distance  service  generally  furnished  by  Euro¬ 
pean  countries  would  never  be  tolerated  by  Americans. 

The  average  time  to  get  a  connection  between  London  and  Paris 
is  one  hour. 

The  average  time  to  get  a  connection  between  Dusseldorf  and 
Berlin  (400  miles)  is  l1^  hours. 

The  Chamber  of  Commerce  of  Alais  (France)  complains  that  it 
is  impossible  to  obtain  telephone  connection  with  Marseilles  (85 
miles)  and  Lyons  (115  miles)  even  after  waiting  four  hours. 

If  the  city  of  Chambery  wants  to  reach  Paris,  the  connection  is 
made  the  day  after  the  call  has  been  filed. 

A  Parisian  wishing  to  make  an  important  toll  call  to  Saint-Malo 
recently,  rose  early  in  the  morning  to  get  a  good  position  on  the  “ ap¬ 
pointment  list.”  The  operator  told  him  he  would  have  to  wait  13 
hours  and  10  minutes  to  be  put  through — about  the  same  time  it  takes 
to  make  the  journey  to  Saint-Malo  and  back  on  the  railroad. 

Aviator  Gilbert,  last  September,  flew  100  miles  from  Paris  to 
Rheims  in  55  minutes.  He  arrived  at  his  destination  before  the  news 
of  his  departure  could  be  telephoned. 

For  this  kind  of  service  furnished  by  European  countries,  the 
average  charge,  considering  differences  in  labor  and  material  costs 
and  distances  covered,  is  greater  than  in  the  United  States,  where 
the  average  time  from  filing  an  order  for  a  long  distance  conversa¬ 
tion  to  completion  of  the  connection  is  not  in  excess  of  5^  minutes. 
On  two-number  service  between  New  York  and  Philadelphia,  it  is 
about  70  seconds. 

In  some  cases,  in  Europe,  a  speedier  service  can  be  obtained, 
more  nearly  like  the  regular  long  distance  service  in  America,  but  the 
governments  charge  double  and  triple  rates  for  the  “special”  pri¬ 
vilege — far  in  excess  of  the  rates  charged  in  the  United  States. 


—  56 


1 


